Perspective # 11 - God is in ‘structures’

God is in ‘structures’: In India though there are few one off business model innovations (Aravind Eye Hospital etc.) we have far to go w.r.t Innovation. Though we all love to believe the perception that China is the factory of the world and India is going to be the laboratory of the world, data does not support this theory.

As per CII’s National Innovation Mission Report, released in May 2007 in India, 2000 patents were approved versus over 100,000 for China. Also, India’s record for new designs was 39 versus 53,000 for China. According to World Bank, China scores 4.74 in Innovative Index, while India scores only 3.72. The UN report says that China is spending 1.5% of its gross domestic product on R&D invesment, twice that of India.The jury is still out but all the stats as of now - Patents, citation analysis, university rankings etc. shows that we are a Innovation laggard.

Prof Vijay Govindarajan, the widely acclaimed Innovation Guru attributes little of India Inc’s current success to Innovation. he says “For the last 15 years, Indian industry has grown merely by sucking out inefficency.To me, that game is now over…looking to the future, our innovation gap is bigger than our efficiency gap” .

They say the world is flat but why Indian IT companies fail to create a YouTube or MySpace? Why don’t Indian Professors come out with business concepts like Blue Ocean Strategy? Why there are no Indian Pharma discoveries like Viagra? Why our doctors are not creating breakthroughs like Emotional Intelligence theory? Why our business journalists are not coming up with concepts like ‘the long tail’?

Why are we great followers? – Kamagra was launched by Ajanta Pharma as soon as Viagra was launched. Similarly ‘rediff i-share’ and ‘big adda’ came up after Orkut’s success. ‘It happens only in Silicon Valley’ is the usual excuse, but what about Skype which is from Luxembourg or Pokemon? or Manga the Japanese comic trip which is a hit globally?

Another excuse is about the ‘huge money spend on research’, but what about Facebook which was created by a 23 yr old college kid and is now worth jaw dropping USD 15 Billion?

The answer is not ‘culture’ but may point out to ‘structures’. It is our ‘structures’ - Incentives, SOPs, Org Charts, Reporting, Performance metrics etc. and not ‘culture’ that stifles Innovation. ‘structures’ and ‘culture’ need to complement. Look at the IDEO office or Bangalore Philips Innovation campus which is designed to stoke innovation. Look at Google’s employee screening process to tap innovation talent and the 20% idea time off for employees.

R&D spending to annual sales of Pfizer, Merck etc. exceed 20% - these are strong hard to ignore ‘structural messages’ which will push the organization's propensity for innovation. ‘Structures’ are great behavior shapers - How on earth can you not hit blockbuster drugs if you spend 20% of your turnover on R&D? Many organizations put too much focus and energy on creating the ‘innovation culture’ without tampering with our good old sacred ‘structures’.

When Krishna Bharat of Google using his 20% time-off created 'Google News' the Print Journalism industry was scared, imagine the disruption if the hundreds of Krishna’s and Bharat’s within our Billion $ software outfits who are tied up by structural chains wake up?